Private markets: an opportunity for discerning investors

High yield potential

One of the main attractions of investing in private markets is the high potential returns they offer investors. Unlike traditional public markets, private markets allow investors to invest in unlisted companies with strong growth potential. These companies may be start-ups, fast-growing or struggling, offering a variety of investment opportunities. By investing in these companies at an early stage, investors can benefit from long-term value creation and from gains made when selling their holdings.

Access to exclusive investment opportunities

Investing in private markets offers investors access to investment opportunities that are not available on the public markets. Unlisted companies often have unique characteristics, such as innovative business models or an advantageous competitive position. By investing in these companies, investors can seize exclusive opportunities and potentially benefit from higher returns than traditional investments. Whether supporting promising start-ups or participating in the growth of family-owned companies, private markets offer a diverse range of investment opportunities. Investors may also be able to negotiate more favorable investment terms, such as lower valuations or more flexible liquidity conditions.

Less volatility

Investments in private markets tend to be less volatile than investments in public markets. Unlisted companies have less pressure to achieve quarterly or annual results, and can therefore focus on longer-term objectives. This can help reduce the volatility of private market investments and offer protection against short-term market fluctuations.

Portfolio diversification

Another key advantage of investing in private markets is their ability to offer portfolio diversification. Private market returns often have a low correlation with public markets, meaning they can evolve independently of stock market fluctuations. By including private market investments in a diversified portfolio, investors can reduce overall risk and improve the risk/return profile. Diversification helps to offset potential losses in other asset classes and protect capital against market volatility.

Investing in private markets can also help investors diversify their portfolios. Unlisted companies are often in different sectors to those listed on the stock exchange, which can offer exposure to growth industries and emerging trends. Investors can also diversify their portfolios by investing in different types of assets, such as real estate or infrastructure.

Influence on company management

Investing in private markets also offers investors the opportunity to influence the management of the companies in which they invest. By acquiring a significant stake in these companies, investors can contribute their expertise, network and experience to support their growth and improve their performance. This active involvement can generate positive long-term results, while enabling investors to play an active role in value creation.

Long-term investment horizon  

Investing in private markets is generally seen as a long-term commitment. Private equity funds typically have a lifespan of several years, which requires investors with a long-term perspective. However, this longer investment horizon can be advantageous for investors with a higher risk tolerance, as it enables them to seize opportunities for long-term value creation.

Greater flexibility

Private market investments also offer greater flexibility in terms of portfolio management. Investors can have greater control over their investments, particularly in terms of timing and duration. Investments in private markets are often long-term, which can enable investors to commit to long-term investment strategies and benefit from additional tax advantages.

In conclusion, investing in private markets can offer significant advantages over public markets. Investors can gain access to exclusive investment opportunities, benefit from higher potential returns, reduce portfolio volatility, enjoy greater management flexibility and diversify their portfolios. However, it is important to note that investing in private markets also entails higher risks, such as reduced liquidity and complex investment structures. Investors should therefore always be aware of these risks and carefully evaluate their options before making an investment decision.